23andMe Will Continue to Sell Genetic Tests For Ancestry

Yesterday, 23andMe provided an update on its blog (see “23andMe Provides An Update Regarding FDA’s Review”) about how it will respond to the FDA’s recent warning letter. In a nutshell, the company will continue to sell the same Personal Genome Service (“PGS”) kits, but new customers will only have access to ancestry-related genetic information and tools, and to their raw data. No health-related information will be provided, for now. Existing customers will continue to have access to all tools, including health-related information.

I’ll note that this is exactly what I predicted would happen in my blog post about the FDA warning letter (see “The FDA Orders 23andMe to Stop Marketing Medical Tests”). You heard it here first! It’s really the most logical approach while 23andMe communicates with the FDA.

The blog post spells out the breakdown:

Kits purchased BEFORE November 22, 2013 – Customers will have access to ALL

Kits purchased on November 22nd and through December 5th– Customers will have access ONLY to ancestry-related information and tools, and to their raw data. Customers may have the option of health-related information in the future. These customers have the option of a full refund because they may have purchased the kit expecting health-related information. You will receive an email from 23andMe about refunds soon.

Kits purchased AFTER December 5th– Customers will have access ONLY to ancestry-related information and tools, and to their raw data. Customers may have the option of health-related information in the future. These customers will have to accept the terms of the “Ancestry Only Notice” before purchasing a kit.

Because the actual testing procedure remains unchanged, new customers will not have to undergo additional testing if the issue with the FDA is resolved and 23andMe can again offer health-related information. At that point, 23andMe will be able to simply activate these tools using the customer’s existing data.

Will 23andMe Survive?

Some are already predicting the demise of 23andMe. I disagree, and caution you to beware the naysayers. With the exception of the new lawsuit, costs for which are currently minimal, 23andMe’s expenses aren’t increasing drastically as a result of the FDA warning letter.

However, sales will certainly go down as a result of not being able to offer health-related information for now (I believe they’ve experienced a significant sales jump in the last few weeks, but that will probably be temporary). That being said, 23andMe has never made much money from the sale of each PGS kit, and based on the cost of SNP chips, kit processing, and general overhead, they probably lose money per kit.

Further, based on 23andMe’s known funding milestones (available at Cruchbase), they likely have a deep reservoir of capital reserves, as well as the inherent value of their database, which is currently 500,000 kits strong.

Accordingly, it is my opinion that reports of 23andMe’s death are greatly exaggerated (ht: Mark Twain). As long as 23andMe and the FDA are able to eventually work out these issues and allow health-related information in some form, I’m predicting that 23andMe will weather this storm just fine.

A Boon for Genetic Genealogists?

It’s possible that this latest course of events may even prove to be a boon for genetic genealogists. With no access to health-related information for new customers in the foreseeable future, 23andMe may feel market pressure to boost the quality and quantity of ancestry-related information provided to customers. Instead of focusing on health, 23andMe can focus on new developments in ancestry to entice new customers.

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The Genetic Genealogist examines the intersection of traditional genealogical techniques and modern genetic research. The blog also explores the latest news and developments in the related field of personal genomics.